The "Middle East and Terrorism" Blog was created in order to supply information about the implication of Arab countries and Iran in terrorism all over the world. Most of the articles in the blog are the result of objective scientific research or articles written by senior journalists.

From the Ethics of the Fathers: "He [Rabbi Tarfon] used to say, it is not incumbent upon you to complete the task, but you are not exempt from undertaking it."

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Friday, February 22, 2013

Read the article in the original עבריתRead the article in Italiano (translated by Yehudit Weisz, edited by Angelo Pezzana)

This is the first in a series of articles on the Arab sector in Israel. We intend to bring to the reader the historical background and the position of the twenty percent of the population of Israeli society that does not share the Zionist dream, but are citizens with equal rights. We will deal with obligations of these citizens later in the series. These issues are politically charged, and represent contradicting narratives, one Jewish, and the other, Arab. The question we will deal with is not what the Jews think about the issues, but rather what are the prevailing opinions within the Arab sector. First, it should be noted that just as there are differences of opinion within the Jewish sector, there are variances in the Arab sector, and attitudes towards the Jewish sector, the state and its institutions not only differ, but often are even polar opposites.We begin with a description of the Arab population in Israel. To start with, I will say that there is no such thing in Israel as one "Arab sector", rather there are several Middle Eastern populations, some of which are not Arab, and they differ one from another in religion, culture, ethnic origin and historical background; therefore they do not constitute one cohesive sector. Parenthetically, it is debatable whether there is one cohesive Jewish sector in Israel. Therefore, when we use the terms "the Arab sector" and "the Jewish sector", it will be only for the sake of simplicity.Ethnic DivisionWithin the Arab sector in Israel there are a number of ethnic groups who differ from each other in language, history and culture: Arabs, Africans, Armenians, Circassians and Bosnians. These groups usually do not mingle with each other, and live in separate villages or in separate neighborhoods where a particular family predominates. For example: the Circassians in Israel are the descendants of people who came from the Caucasus to serve as officers in the Ottoman army. They live in two villages in the Galilee, Kfar Kama and Reyhaniya, and despite their being Muslim, the young people do not usually marry Arabs. The Africans are mainly from Sudan. Some of them live as a large group in Jisr al-Zarqa and some live in family groups within Bedouin settlements in the south. They are called "Abid" from the Arabic word for "slaves". The Bosnians live in family groups in Arab villages, for example, the Bushnak family in Kfar Manda. The Armenians came mainly to escape the persecution that they suffered in Turkey in the days of the First World War, which culminated in the Armenian genocide of 1915. Cultural DivisionIn general, it can be said that the Arab sector is divided culturally into three main groups: urban, rural and Bedouin. Each one of these groups has its own cultural characteristics: lifestyle, status of a given clan, education, occupation, level of income, number of children and matters connected to women, for example polygamy (multiple wives), age of marriage, matchmaking or dating customs and dress. The residents of cities - and to a great extent also the villagers - see the Bedouins as primitive, while the Bedouins see themselves as the only genuine Arabs, and in their opinion, the villagers and city folk are phony Arabs, who have lost their Arab character.The Arabic language expresses this matter well: the meaning of the word "Arabi" is "bedouin", and some of the Bedouin tribes are called "Arab", for example "Arab al-Heib" and "Arab al-Shibli" in the North.The Bedouins of the Negev classify themselves according to the color of their skin into "hamar" (red) and "sud" (black), and Bedouins would never marry their daughters to a man who is darker than she is, because he does not want his grandchildren to be dark-skinned. Racist? Perhaps. Another division that exists in the Negev is between tribes that have a Bedouin origin, and tribes whose livelihood is agriculture (Fellahin), who have low status. A large tribe has a higher standing than a small tribe.Religions and SectsThe Arab sector in Israel is divided into Muslims, Christians, Druze and 'Alawites. The Christians are subdivided into several Sects: Orthodox, Catholic and Protestant, and among the Muslims, there is a distinct sect of Sufis, which has a significant presence in Baqa al-Gharbiya. There is also an interesting Salafi movement in Israel, which we will relate to later. The Islamist movement is organized along the lines of the Muslim Brotherhood and we will dedicate significant space to it in this series.The religion of the Druze is different from Islam, and Muslims consider the Druze to be heretics. Because of this, the Druze are supposed to keep their religion secret, even from each other, and therefore most are "juhal" (ignorant - of religious matters) and only a small number of the elder men are "aukal" (knowlegable in matters of religion"). In the modern age there have been a number of books published about the Druze religion. The 'Alawites in Israel live in Kfar Ghajar, in the foothills of the Hermon and some live over the border in Lebanon. They are also considered heretics in Islam, and their religion is a blend (syncretism) of Shi'ite Islam, and Eastern Christianity and ancient religions that existed in the Middle East thousands of years ago. Their principle concentration is in the mountains of al-Ansariya in northwest Syria, although some are in Lebanon and some migrated southward and settled in Ghajar. The meaning of the word Ghajar in Arabic is "Gypsy", meaning foreign nomads with a different religion. In Syria the 'Alawites have ruled since 1966. The family of Asad is part of this heretical Islamic sect , and this is the reason for the Muslim objection to 'Alawite rule in Syria since according to Islam, not only do they not have the right to rule, being a minority, but there is significant doubt as to whether they even have the right to live, being idol worshipers.Migration to IsraelSome parts of the Arab sector are communities that have lived in the land now called the State of Israel [Translator's note: we will henceforth refer to this area as the Land] for hundreds of years, but a significant part is the offspring of immigrants who migrated to the Land mainly in the first half of the twentieth century, especially after 1882, when Petach Tikva was established. Many people from neighboring lands migrated to the Land at that time in order to work in the Jewish farming communities. Many migrated from Egypt even before, in order to escape from being impressed into forced labor as the Suez canal was being dug. This is how the al-Masri, Masarwa and Fiumi families as well as many others came to the Land, with names that testify to their Egyptian source. Other families have Jordanian names (Zarkawi and Karaki, for example), from Syria (al-Hourani, Halabi) from Lebanon (Surani, Sidawi, Trabulsi) and from Iraq (al-Iraqi).The Arabic dialect spoken by most of the Bedouins in the Negev is a Saudi-Jordanian dialect, and because of their familial ties to tribes living in Jordan, when the Bedouins become involved in matters of blood-vengeance, they escape to family members who live in Jordan. The connection between Arab families in Israel with groups in neighboring countries should not be surprising, because until 1948 the borders of Israel were not hermetically sealed, and many Arabs of "Sham" (Greater Syria) wandered into the Land almost totally unimpeded, following their flocks and the expanding employment opportunities .Traditional vs. ModernThe division between traditional and modern outlooks exists in each of the other groups, meaning that in each group indicated above there is a subdivision: those who are more connected to the tradition of the group and those who are less connected. Among the young, one sees more openness and less adherence to group tradition, and it can be assumed that the young of the next generation will generally adhere even less to group's traditions. This is obvious among the Bedouin groups, because among the young there are more than a few who challenge the socially accepted ways of the Bedouin.Education also plays an important role in the changing attitude toward tradition, because Arab academics are usually less linked to social tradition and the framework of the clan and live more within the framework of nuclear families (father, mother and children). They also tend to move to more open areas such as mixed cities (Acre, Ramla and Lod) and even to Jewish cities, such as Be'er Sheva, Karmiel, and Upper Nazareth) and adopt a modern life-style. The shift to the city is also connected to a change in the source of livelihood - there are more in the independent professions and less in agriculture - a change that was due partly to the confiscation of the lands of absentees after the War of Independence.Division by GenderAs in every other society in the world, there is tension between men and women among the groups that make up the Arab sector in Israel. Tension exists regarding issues of gender such as the rights of women to learn, to work, to choose a mate, freedom of behavior, the age of marriage and number of children. The tension between men and women that exists in the Bedouin groups is different from that which exists in the villages and the cities, because of the difference in exposure to the Jewish sector, in education and methods of earning a livelihood that exist between the various segments of the Arab sector.Basic Differences between the Jewish and Arab sectorsBeyond the religious dividing line in Israel that differentiates Jews and non-Jews, another basic division exists between the Jewish and Arab sectors in their approach - in general - to the state. For most of the groups within the Jewish sector, the State of Israel fulfills two roles: one is the political and governmental embodiment of the aspirations of the Jews to return to themselves and regain the independence and sovereignty over the Land of their fathers that was stolen from them after the destruction of the Second Temple. The symbols of the state are Jewish, such as the national anthem, which includes the words "the Jewish soul yearns", the flag which represents the prayer shawl, the Shield of David and the seven-branched menorah, the Hebrew language is the official language of the state, on the Jewish holidays, the governmental institutions are closed, and thus the state bears Jewish genes. The second role of the State of Israel in the eyes of most Jews is functional: to provide its citizens with security, employment, livelihood, health, education, roads, bridges and social services.For the Arab sector, the first role does not exist; the State of Israel is not the embodiment of their diplomatic and political dreams. The national anthem is not their hymn, the symbols of the state are not their symbols, and our Independence Day is their "Nakba" (disaster). The second role as well, the functional, is only partially fulfilled by the state in matters of education, planning, roads and infrastructure. One may argue about the causes and reasons, but the facts are clear: How many Arab Members of the boards of directors of government companies are there? How may Arab judges are there in the High Court? What is the proportion of Arabs in the academic staff of universities?But on the other hand, one cannot ignore the phenomenon of "reverse discrimination" either: laws of planning and building, that are observed almost fully within the Jewish sector, are very loosely observed within the Arab sector, especially in the Bedouin sector in the Negev. How many thousands of buildings have been built in the Negev without building permits on land that does not belong to Bedouins? How is it that there are no sidewalks in Um al-Fahm and the distance between the buildings is about the width of the cars?Another example of reverse discrimination exists in the area of marriage: if a Jew dares to marry a woman before he has completed the process of divorce from his present wife he will find himself behind bars, like the singer Mati Kaspi. But if an Arab marries a second, third or fourth wife, the state pays a monthly children's allowance for each wife separately and without asking too many questions. Another case of discrimination in favor of Arabs exists in the area of housing: in the Jewish sector about ninety percent are residents of apartments and about ten percent live in private houses. In the Arab sector the picture is the reverse: more than ninety percent live in private homes, and less than a tenth live in apartments.But the characteristic that most unites the Arab sector in Israel is the environment that they live in: All the Arabs in the world live in one of two situations: Either in dictatorships in their homeland, or in dictatorships in the diaspora. There is almost no Arab community in the world that lives in its homeland for tens of years in a truly democratic state. The Arab citizens of Israel are the only Arab group that lives on its land (especially if you ignore the lands from which they originated) in a democratic regime that honors human rights and political freedoms. This is the reason that Arabs outside of Israel envy the Arab citizens of Israel and call them "Arab al-Zibda", or "whipped cream Arabs".

Dr. Mordechai Kedar (Mordechai.Kedar@biu.ac.il)
is an Israeli scholar of Arabic and Islam, a lecturer at
Bar-Ilan University and the director of the Center for the
Study of the Middle East and Islam (under formation), Bar
Ilan University, Israel. He specializes in Islamic ideology
and movements, the political discourse of Arab countries,
the Arabic mass media, and the Syrian domestic arena.

Translated from Hebrew by Sally Zahav with permission from the author.

Source:
The article is published in the framework of the Center
for the Study of the Middle East and Islam (under
formation), Bar Ilan University, Israel. Also published in
Makor Rishon, a Hebrew weekly newspaper.

In Part 1
of this interview with former FBI operative Larry Grathwohl, we
addressed the goals and methods of the Weatherman organization and
debunked recent attempts to dismiss their words and activities as
"youthful folly" or "typical of those days." In Part 2,
we discussed the continuity of purpose connecting the murderous
radicalism of the Weather Underground leadership with the progressive
education and social justice advocacy of the "mature," "respectable"
Ayers, Dohrn, Machtinger, Boudin, and others.

Here
in the final installment, I ask Grathwohl about the alarming cognitive
dissonance of today's Middle America in the throes of the "fundamental
transformation" promised by Barack Obama, facilitated by the progressive
education and legal establishments, and put into practice by federal
agency appointees, colleges of education, union leaders, and bureaucrats
with established leftist pedigrees.

As
an example of this dissonance, consider an American colleague of mine
here in Korea: a friendly, down-to-earth, educated family man in his
early thirties, and a teacher by profession. On the eve of the 2012
election, I asked him whether it bothered him that Barack Obama had been
so strongly endorsed
by the Communist Party. He said he had never heard of that. When I
explained that the Party's official endorsement cited Obama's signature
policy initiatives as the surest means to achieving socialism in
America, and that CPUSA leaders were actively campaigning
for Obama in swing states, my colleague fell silent for a moment, and
then said, matter-of-factly, "It doesn't really bother me; I guess it
might bother me if Obama were endorsing the Communist Party, but if they're endorsing him, it doesn't matter."

I leave you with that thought, by way of introduction to Part 3 of my conversation with Larry Grathwohl.

DJ:
The Communist Party USA has officially endorsed and vocally supported
President Obama, and his administration has included several people with
well-known Marxist or Maoist views and affiliations. And yet most
people, including many so-called conservatives, shy away from this
entire subject area, and they practically run for the hills when anyone
mentions Bill Ayers, re-education camps, or communism in connection with
current political events.

Why do you think there is such discomfort among Americans, including supposed conservatives, when confronted with this issue?

LG:
To answer this question in a word, I would say "political
correctness." Today we live in a world where people are afraid to
discuss issues of importance due to a concern that they might say
something wrong. We have a society where people can be condemned for
being on the wrong side of an issue, especially if you're in a position
where you could be labeled as a racist or an individual who has no
sensitivity towards those who are in some way in need. Today, [concern
about] Marxism is out of vogue, and the Chinese are our friends and are
lending us money in order for our government to continue to exist. How
can you question this? Conservatives are afraid of being labeled as
mean or uncaring and want to maintain a civil image in the midst of this
chaos and confusion. Senator McCain during the 2008 presidential
campaign refused to confront Barack Obama regarding his ties to Bill
Ayers the unrepentant terrorist. When others brought up the possibility
of Obama's connection to the Muslim world, McCain became angry and
turned away. By doing so, he negated any possibility of forcing the
two-year member of the Senate to explain his sympathetic positions
towards Islamic terrorism and the domestic terrorism that his friend
Bill Ayers had participated in [during] the '70s and the '80s.

Basically,
this is the problem we face today. If you criticize the president for
any of his policies, you are racist, and your argument ends. There
aren't defenses for these kinds of accusations, and it completely
eliminates any possibility of discussion and compromise. This works
wonderfully for the Democrats and their policies, and it puts the
Republicans and conservatives in very un-defensible positions. The
bravery or whatever you care to call it simply no longer exists [when]
people who are involved in the political process are more concerned with
the next election than they are with what's best and right for
America. I often wonder what would've happened during the Revolutionary
War if people of this stature were to be the ones we were dependent
upon to defeat the British. I wonder if this tendency can be overcome
or eliminated.

DJ:
How frustrating is it for you, having seen what you have seen, to
encounter this kind of reluctance from people who should be your allies?

LG:
While I do have some allies, which includes those who have the courage
to speak the truth and to stand up for what's right, the fact is that it
is extremely frustrating that people are simply unable to recognize the
truth when it is presented to them along with the evidence which exists
in the WU's activities, writings, and continued attack on our
institutions. As for me, the frustration is simply a greater motivation
to accomplish my mission of enlightening people as to the true goals
and objectives of the WU and the means that they used in their attempt
to achieve the destruction of the United States.

DJ: Many people dispute President Obama's claim that Bill Ayers was just "a guy in my neighborhood." And Ayers himself has spoken
of being ecstatic when Obama was elected in 2008. What connection or
consistency do you see between the goals and/or methods pursued or
promoted by the WU and those pursued and promoted by the Obama
administration?

LG:
The goals and objectives of these two individuals are the same. Bill
Ayers tried first to destroy this country through violence. Having
failed, the WU determined to accomplish this through the system and in
my opinion Barack Obama was recruited as a means to accomplish this
goal. ...

The
connections between Barack and Bill include having shared an office for
at least three years in Chicago, being co-members on two boards in
which Barack was the chairman, and one of which was called the Annenberg
Challenge[, which] was charged with the dissemination of approximately
$100 million to educational institutions in the Chicago area. Bill
Ayers has been associated with the writing of Barack's book, Dreams from My Father,
through content analysis, and on three occasions Bill has admitted that
he wrote this book and then later retracted his comments. It would
seem apparent to me that individuals who have been this closely
associated through many years have a common knowledge [of] one another's
political aims and goals. This can only mean that they are in
agreement, and while Bill has utilized the educational system to further
his objective, Barack Obama has chosen politics. Keep in mind that
Barack Obama's first political fundraiser was held at Bill's and
Bernardine's home while Barack was running for the Illinois state
legislature. This is his first fundraiser, and Bill and Bernardine are
involved -- can there be any doubt as to the extent of the relationship
that exists between these individuals?

Obama
is in the process of attacking all institutions of our society and
government, [including] the First Amendment by stating that it's the
conservative media that keeps the Republicans from negotiating with him;
the Second Amendment [through] his attempts to impose restrictions on
gun ownership, procurement of ammunition, and whatever other means he
can devise; and lastly, there is his attack on the freedom of religion
by trying to impose birth control and abortion under the Obama health
care act on churches who run such institutions as hospitals, schools,
rests homes, and other services.

DJ:
You have spent a good portion of your life trying to warn Americans
about the specific intentions of the young leftist radicals of the late
1960s. How do you answer people who might say that those leftists are
older now, their radical days are in the past, and there is no longer
anything to worry about from them?

LG:
The fact is, Bill Ayers and many of his comrades from those days of
strategic sabotage in the underground movement have not changed their
goal or their purpose. Bill has made this very clear in his book, Fugitive Days,
in which he makes no apology for the death and destruction the WU were
responsible for and even seems to revel in what he perceives as the
glory of the revolution. In his book Underground, Mark Rudd
also makes no apologies for his activities and even admits prior
knowledge to the bomb factory in Greenwich Village in which three
members of the WU were killed. He states that Terry Robbins had told
him of the purpose of their bomb creations and that they were to be used
at Fort Dix, New Jersey during an enlisted men's dance and at the
officers' club. These bombs were adulterated with fence staples and
roofing nails, whose purpose can only be to inflict as much death and
injury as possible. There are many other individuals from the WU who
have written books and also regret only that they did not succeed or
that they didn't do enough. Some individuals were involved in a Brinks
armored car robbery during which two policemen and a Brinks guard were
killed. Kathy Boudin is no longer behind bars, but her husband,
accomplice David Gilbert, is still in jail and writing books about love
and the revolution and has many supporters [who are] trying to get him
released to this very day.

It
simply cannot be said that these people have allowed the last three or
four decades to change their political beliefs or political goals.
Instead, they have been involved with the Occupy Wall Street movement
and the encouragement of young people to defy authority and to create as
much chaos and turmoil as possible. Bill has actually attended Occupy
meetings during which he instructed individuals on how to accomplish the
most destruction of property and confrontation with authority and in a
way that makes it appear as if they are the victims. This I know for a
fact, as people who are friendly to me and have attended some of these
meetings have reported these facts.

Van
Jones, who was appointed as the green jobs czar by President Obama, is
very active [in the] political movement in the Bay Area, particularly in
Oakland and Berkeley. He has associations with Bill Ayers and has
attended Occupy meetings in which they were both in attendance.

It
is simply impossible to conclude that any of these people have in any
way, shape, or form been influenced to change their political beliefs or
their goal and objectives by the passage of time. They still believe
that the United States is the root of all evil and must be destroyed,
whatever it takes. Innocent lives or genuine disagreement is not a
qualification for being spared, and it is my belief that Bill and people
who follow Bill are consumed with this hatred for this country and a
desire to be in control of life and death, and this may be the
underlying reason for the personality disorders they obviously suffer
from.

Author's
concluding note: Larry Grathwohl provides powerful witness to the
hatred the Weathermen bear for the United States as founded, and their
utter disregard for human life in pursuing their transformative agenda.
I do not believe that Grathwohl's perspective is infallible any more
than I believe that of anyone else. I do believe, however, that he
speaks sincerely, and from a deep understanding of the minds and hearts
of the Weather Underground radicals.

Rational
observers know that Ayers's relationship with Obama is much more
developed than either man has publicly acknowledged. And it is
undeniable that these two progressive "reformers" have achieved a degree
of mainstream success and influence in their respective fields of
endeavor, education, and politics that would have been inconceivable a
hundred years ago, when Ayers's educational role model, John Dewey, was
beginning progressivism's long march through the souls of America's
children. A century of progressive schooling made Barack Obama's
presidency possible. In turn, with a president openly bent on
transforming America according to a collectivist "social justice"
agenda, public education itself, under the leadership of Ayers and his
colleagues, may reveal itself ever more fully as the socialist
indoctrination center Dewey could only dream and scheme of.

As
Grathwohl warns, Ayers is urging followers to see that they are "very
close to accomplishing their mission of changing America forever." The
circle envisioned by early Western progressive intellectuals such as
Antonio Gramsci is almost complete: government schools prepare the souls
of men for subservience and dependency, and the progressive
intelligentsia churn out attractive demagogues to appeal to this
forcibly debased population's need for a provider. Eventually, all that
is preserved of the history of modern liberty will be the veneer of
democracy masking the tyrannical structure beneath, as an emasculated
humanity "freely chooses" its own slave masters.

After
reading Jan Gross’s “Golden Harvest,” the Polish historian’s ground
breaking study of the Holocaust, I began to understand what for so long
had perplexed me — how it is that so many people feel impelled to weigh
in on the affairs of Israel and the Jews. While murder and mayhem
remains a constant in the world, no other nation attracts so much
critical attention. (The United Nations has passed far more resolutions
with respect to the state of Israel than the rest of the world
combined.) And in a remarkable display of moral hubris, the heirs and
descendants of those who extinguished their Jewish populations in the
forties have felt themselves entitled to render moral judgment on the
survivors and their progeny.

Jews for millennia were spurned as Christ-killers and heretics by
Church and Mosque respectively and denied standing in the communities
where they lived. While rejecting Judaism itself, the Christian Church
laid claim to the Jewish Bible, which it annexed, abridged,
and renamed the “Old Testament.” And over time the Christian world
came to regard as patrimony whatever else the Jews possessed. (Islam in
its ascendance picked up where Christianity left off.) To this day the
mainstream Protestant churches in America stand foursquare with Fatah
and Hamas, averring the Palestinian cause and condemning Israel. Jew
killing has never been a moral problem for them, but the Jewish claim to
the land of Israel disturbs them deeply.

Landless for two thousand years, dependant on the reticence of
peoples ill-disposed toward them, Jews survived precariously, lorded
over by gentile “hosts” in societies that were variously hostile. When
so inclined, their hosts would confiscate their property, issuing and
enforcing decrees against them. Subject to the will and whim of others,
Jews remained dependant on their sufferance and largesse. As tenant
farmers and as tradesmen, they owned only what was allotted them,
allotments that could be reduced or removed, dispossessing them at
will. At times dispossession would encompass their very existence –
witness the Crusades, the Inquisition, innumerable pogroms, and,
ultimately, the Shoah. A sense of entitlement seems to have passed
into the DNA of formerly host societies, and continues in altered form
until this day – e.g., the violent hostility of the Arab/Persian world
which remains at war with Israel and the turpitude of Western nations
who support or excuse it. Even in our own time, Europeans afford
themselves a privileged position with respect to Jewish interests,
threatening and cajoling Israel to redistribute its property to its
enemies.

Financially reliant on petro-dollars, the West in its cupidity has
chosen to appease the Arabs and support them in their conflict with
Israel, no matter that Arab hatred of the Christian West runs second
only to their Jew hatred. Islam’s jihadist ambitions and its utter
rejection of a Jewish or Christian presence in the Middle East are
inconvenient truths suppressed to win favor with the Arabs for their oil
money.

But in spite of their great wealth, Arab societies are in a shambles,
and, who better to blame for it than Jews? At the heart of the
Arab-Israeli conflict are generations of impoverished refugees living
shiftless lives on United Nations handouts for more than sixty years.
They are portrayed as victims, no more responsible for themselves than
children. (A comparable number of Middle Eastern Jews fled persecution
in their home countries and found refuge in Israel where they were
absorbed and integrated into the fabric of the country.) The wealthy
Arabs states, without the least diminution in their lavish lifestyle,
could have transformed the condition of their poor relations but chose
instead to “drive the Jews into the sea.” Oil rich Arabia dwarfs Israel
physically and economically, but it is Israel that is held responsible
for Arab poverty, just as Jews for centuries were held responsible for
crises in the West. The “Zionist Entity” with its “settlements” is the
moral culprit, and justice demands that, “like a cancer,” it be cut out.
The benighted ways and terroristic activities of the Arabs are excused
or rationalized away. Israel’s refusal to cede its heartland is “the
main obstacle to peace.”

A nomadic people, Arabs for centuries moved hither and yon throughout
the Middle East. Only with the arrival of the British and the
development of a Jewish homeland did some claim an identity related to
the sparsely populated area called “Palestine,” originally a Roman
appellation. The wealthy Arab states, which deflect dissent by
inveighing against Israel, decry the suggestion that a place for their
brethren could be found elsewhere in the vast land mass of the Middle
East.

From his research, Gross learned that the nations (primarily Poland
in his work but all of Europe by implication) regarded the existential
situation of the Jews as theirs to determine. Those to whom Jews were
required to answer, be they German or Pole or Russian or Ukrainian or
Italian or Greek or Spanish or Turk (to name some of the more
significant actors in their long and tragic history), could deny them
acceptance and remove whatever security they enjoyed. Indeed, their
status could be altered at will, even when they had been living in a
locale for centuries. Whatever the Jews possessed could be taken and
they themselves sent packing. Without moral or legal standing, their
possessions could be absorbed as common property. The host giveth, the
host taketh.

Gross illustrates this point with examples from the war years in
Poland where Jews were often blackmailed by their so called protectors –
Poles who, for their own reasons, hid them. According to his
research, extortion for safe keeping was not at all exceptional. The
major motivation of “benefactors” was to gain access to the hidden
property of Jewish victims. (It was an axiom of belief that even the
most impoverished of Jews had hidden away riches.) And when Jews
resisted their demands, their Polish protectors took umbrage —
threatened them with violence or betrayal to the Germans. Since the
Jews were doomed and defenseless, their stubborn hold out was denying
Poles their due. Polish Jews were favoring the Germans over their
fellow countrymen. And, for many Europeans, Jewish “intransigence” is a
source of consternation to this day. They are much displeased when
“shitty little Israel” will not jump at their command.

Of course, not all Europeans are hostile and certainly the majority
of the American people hold Israel in high esteem — a loyal friend who
shares their deepest values. But Europeans generally, as well as Arab
sympathizers in this country, demand that Judea (from which the Jews
derive their name) and Samaria — lands documented in the holy books of
both Judaism and Christianity, and recorded in the annals of history as
theirs for three thousand years — be surrendered to their enemy. For its
recalcitrance, Israel is threatened with economic reprisals and
denounced in international forums. Some Europeans regard the very
existence of Israel as an injustice — an insult to their moral
sensibilities. They embrace the Arab narrative with respect to
“Palestine,” a narrative that denies the historic connection of Jews to
their ancient land. Wars and mass murders committed by the Arabs give
them no pause. Like Poles, Ukrainians, and Baltic people in the
forties, so-called peace organizers support these self-confessed killers
and organize public protests on their behalf. Jews must surrender the
land, i.e. the real property of their people. Refusal, their critics
claim, is pointless. Surrender is inevitable. Israel will perish if it
does not give way. (They know what’s best for Jews. They always
have.) The land in question, including much of Jerusalem and its
environs, will be redistributed to “displaced Arabs” who have been dealt
a perceived injustice. Under certain circumstances, Jews might be
permitted to retain a small portion of their ill-gotten gain. (When a
gain is Jewish, it is ill-gotten by definition.)

In the star chamber of world politics, the privileges of ownership
are available to some and not others — Israel in particular. Its
de-legitimization by the Left, abetted often by Jewish leftists, fits
well with the Left’s disparagement of property rights in general. Arab
failure, in repeated attempts, to destroy Israel and rid the region of
its Jewish presence elicits their sympathy. Immersed in relativism and
empathetic to all forms of failure, they accept Palestinian Arab claims ipso facto
and dismiss those of the Israelis. Israel’s improbable success and
contributions to the world at large make it all the more troubling in
their eyes. Though the existential threat to it from Iran grows by the
day, it fails to arouse their concern. Jewish tragic history has been
relegated to a footnote and deemed no longer relevant, Jewish survival a
parochial anomaly with no place on their “universal” agenda. The
success of capitalist Israel, thriving in the face of worldwide
opposition, adds insult to the injury suffered by the Arabs. For the
Left, pacifism, gay marriage and unlimited abortion occupy the moral
high ground. Jewish land is an oxymoron, a Zionist pipedream,
internationally condemned to requisition and redistribution by the
United Nations. Alas, the “holy land” belongs neither to Jew nor Arab,
but is the common property of any and all people.

by Waleed Abdul RahmanCairo, Asharq Al-Awsat—Statements by Ahmed Mousavi,
Iranian presidential adviser and Director of the Haj and Pilgrimage
Organization (HMO), on President Mahmoud Ahmadinejad’s recent visit to
Cairo provoked serious controversy in Egypt earlier this week. Mousavi
was talking about the contentious meeting that took place between
Iranian President Ahmadinejad and Al-Azhar Grand Sheikh Ahmed Al-Tayeb
against the backdrop of the 12th Organization of the Islamic Cooperation
(OIC) Conference in Cairo.

Mousavi’s statements were published on
Iran’s Fars News Agency’s Arabic language website on Wednesday under the
headline “Unpublished details on the president’s discussions with
Al-Azhar professors.” It contained a different account of the
contentious meeting to the one reported in the Egyptian press between
the Iranian president and Al-Azhar Grand Sheikh, and the equally
difficult press conference that followed this closed-door meeting.

Fars
News Agency quoted Mousavi as saying, “Following the end of the Iranian
delegation’s meeting with the Al-Azhar Grand Sheikh, the Iranian
president had not been scheduled to hold a press conference.”

The
Iranian presidential adviser, who accompanied Ahmadinejad on the Cairo
trip, revealed, “When we left the meeting we were confronted by a crowd
of journalists. I was standing next to the president during the press
conference in case he needed any translation . . . During the press
conference I felt that everything was orchestrated and there were those
who wanted to reveal what was discussed during the Al-Azhar meeting in
order to embarrass the president.”

Al-Azhar issued an official
statement yesterday responding to Mousavi’s allegations. The statement
read, “Al-Azhar has a single viewpoint and discourse and transparency is
our guide. The allegation that this press conference was a surprise is
not correct, and the Iranian chief protocol office or ambassador could
have acted to clarify the nature of this press conference to the
journalists. This is the business of the Iranian delegation, and
Al-Azhar, which is well aware of the rights of guests and Islamic
manners, has nothing to do with this.”

Iranian complaints
regarding the press conference seem to focus on the person of Al-Azhar
spokesman Sheikh Hassan El-Shafei, who represented Grand Sheikh
Al-Tayeb. However, the Al-Azhar statement stressed that “The meeting
took place with absolute sincerity and transparency and the press
conference took place in the same spirit and President Ahmadinejad shook
Dr. Hassan El-Shafei’s hand.”

However Mousavi opined that this
press conference was an attempt to raise the issue of Sunni—Shiite
problems and the Syrian crisis, adding “this led us to threaten to walk
out of the press conference if contentious issues were raised in
public.”

The Al-Azhar statement revealed, “The Iranian president
expressed a desire to visit Al-Azhar and meet with Grand Sheikh Dr.
Ahmed Al-Tayeb and a group of senior scholars. Following the meeting the
visiting president and his entourage, including the chief protocol
officer, were told that the Grand Sheikh does not take part in press
conferences and that his senior adviser, Hassan El-Shafei, would be
representing him. Both the chief protocol officer and the president
accepted this and they—the Iranian delegation and El-Shafei—went to the
press conference together.”

Asharq Al-Awsat attempted to contact
members of Al-Azhar’s Senior Scholars committee, but they refused to
comment on Mousavi’s allegations.

A source within Al-Azhar,
speaking to Asharq Al-Awsat on the condition of anonymity, revealed the
real reason behind the Iranian delegation’s anger. The source said, “The
Iranian President resented Dr. Hassan El-Shafei’s criticism of Iran’s
desire to spread Shiism in Egypt.”

He added, “Ahmadinejad and
El-Shafei entered a private conversation and the Al-Azhar Grand Sheikh’s
adviser spoke candidly, saying: We feel sadness about what we always
hear regarding insults towards the Companions of the Prophet and the
mothers of the believers and this is something that we completely
reject.’”

The source revealed that El-Shafei criticized Tehran’s
desire to promote Shiism in Egypt, characterizing Egypt as a historical
“bastion of Sunni Islam.”

The Al-Azhar source also informed Asharq
Al-Awsat, “El-Shafei continued his strong words until Ahmadinejad
interrupted him in Arabic, saying: We agreed on unity and fraternity.”

He
said, “The real reason for the Iranian president’s anger is his
objection to the statement issued by Al-Azhar which was published in
local and international media outlets . . . this is the same statement
that was read out by El-Shafei and which included the points of
contention raised by the Grand Sheikh during his meeting with
Ahmadinejad.”

The Al-Azhar source added, “This should have been a
closed-door meeting with nobody knowing what was discussed. Some have
described these points of contention as the ‘four no’s', namely
non-interference in Gulf affairs, including respecting Bahrain as a
sisterly Arab state, rejecting Shiite expansionism in Sunni states,
putting an end to the bloodshed in Syria and ensuring that it becomes
safe and secure, and granting the Sunnis in Iran their complete rights.”

The
source also revealed that Ahmadinejad was angered by the number of
satellite television channels present immediately after his meeting with
the Al-Azhar Grand Sheikh, adding that the Iranian delegation was not
expecting to hold such a large press conference. The Al-Azhar source
claimed that Ahmadinejad thought that his meeting with Al-Tayeb would be
followed by a small-scale press conference where the talk would focus
on Egyptian – Iranian relations.

Following this contentious
meeting and press conference at Al-Azhar, Ahmadinejad visited Cairo’s
Al-Hussein mosque where he was confronted by a number of Egyptian and
Syrian protesters, of of whom attempting to hit him with a shoe.

However
Mousavi told Fars News, “I and other members of the delegation did not
see anybody trying to throw a shoe (at Ahmadinejad), but we enjoyed a
standing ovation from the Egyptians during our visit of some districts
such as the Ras Al Hussein district.”

He added, “The only
protester we saw was one reporter at a gathering at the Iranian embassy
where Ahmadinejad was present, however this is normal.”

The
Iranian presidential adviser stressed, “In any case, the Iranian
delegation’s visit to Egypt was very useful and constructive.” He
emphasized, “In my point of view, the message of the Islamic Republic of
Iran reached the ears of the Egyptian people during our visit.”

The two disrupted terror plots are the latest in a string of attacks, some foiled, others not, hatched by Iran against Israeli targets around the globe, including in India, Bulgaria, Thailand, Kenya and Azerbaijan • Hezbollah agents use Australian, Canadian, Swedish passports to travel in Europe.

The attack in Burgas, Bulgaria. Are similar attacks in the making in Cyprus?

Photo credit: AFP

Two Iranian-backed terror cells were exposed in Nigeria and Cyprus this week, shedding more light on Iran's global terrorist activities against Israel and other Western targets.

The two disrupted terror plots are the latest in a string of plots, some foiled, others not, hatched by Iranians against Israeli targets around the globe, including in India, Bulgaria, Thailand, Kenya and Azerbaijan.

Nigeria's secret police said Wednesday they broke up a terrorist group backed by "Iranian handlers" who wanted to assassinate a former military ruler and gather intelligence about locations frequented by Americans and Israelis.

The State Security Service, responsible for domestic spying in Africa's most populous nation, offered no details about who controlled and bankrolled the group. However, it said it had arrested three suspected terrorists, including the group's leader, before they could launch attacks.

The leader's "lieutenants successfully conducted surveillance and gathering relevant data ... [for] possible attacks," secret police spokeswoman Marilyn Ogar said, reading from a statement. "He personally took photographs of the Israeli culture center in Ikoyi, Lagos, which he sent to his handlers."

The service identified the leader as Abdullahi Mustaphah Berende, a 50-year-old leader of a local Shiite sect in Ilorin. Ogar said Berende was arrested along with two other suspected members, while another remained at large.

Berende first traveled to Iran in 2006 and studied at an Islamic university, said Ogar. He later returned in 2011 and learned how to use Kalashnikov assault rifles and pistols, as well as making and detonating homemade explosives, she said.

Ogar identified high-level targets of the group as former military ruler Ibrahim Babangida and former Sultan of Sokoto Ibrahim Dasuki, an important Islamic leader in Nigeria. The group also conducted surveillance on USAID, the U.S. Peace Corps and other targets, she said.

Berende also received some $30,000 in cash to fund the group's planned operations.

Ogar did not take questions, nor did she elaborate on the statement. It remains unclear how close the group was to actually making any attack.

Nigeria, home to more than 160 million people, is largely divided into a Christian south and a Muslim north. Nigeria's Muslims are predominantly Sunni, though there is a Shiite community in the country. Iran has backed Shiite groups in Nigeria in the past.

Iran has previously been involved in police actions in Nigeria. In 2010, authorities at Lagos' Apapa Port found a hidden shipment of 107 mm artillery rockets, rifle rounds and other weapons from Iran. The shipment was supposedly bound for Gambia. A Nigerian and an Iranian with alleged ties to Iran's Revolutionary Guard Corps face criminal charges over the shipment.

Meanwhile, a man being tried on allegations that he planned attacks on Israeli tourists in Cyprus has admitted to being a member of Hezbollah and staking out locations frequented by Israelis, his lawyer said Wednesday.

Lawyer Antonis Georgiades said that Hossam Taleb Yaacoub, a dual Swedish-Lebanese citizen traveling on a Swedish passport, told a court in Cyprus that he had come to the country on business with no plan to harm anyone. But Yaacoub, 24, also admitted that an unidentified man in Lebanon, where Hezbollah is based, gave him the "mission" of recording flight arrivals and bus routes of Israeli tourists and checking out a hospital parking lot.

Yaacoub's admissions follow accusations that Hezbollah was behind the July 2012 bombing in Burgas, Bulgaria, that killed five Israeli tourists and a local driver. Authorities in Cyprus have been reluctant to link the Cyprus case to the attack in Bulgaria, but both have fed concerns about terror activity in Europe. According to reports, the Hezbollah terror cell in Burgas used Australian and Canadian passports to travel into and out of Europe.

Georgiades said Yaacoub acted alone in Cyprus and that instructions had been given to him "in complete secrecy" by a man whose face he had not seen. The lawyer said that while his client's actions might raise suspicions, there was no hard proof that Yaacoub had been planning an attack.

Cyprus police arrested Yaacoub last July, several days before the Bulgarian bombing.

Yaacoub pleaded not guilty to eight charges, including conspiracy and consent to commit a criminal offense and participation in a criminal organization. According to police, Yaacoub initially faced 17 terrorism and terrorism-related charges, but prosecutors dropped any reference to terrorism in the new charges without explanation.

According to notes explaining the charges, prosecutors say Yaacoub knowingly conspired with others to "abduct a person for the purpose of subjecting him to harm or attacking him to cause grievous bodily harm" and was prepared to carry out missions around the world on the orders of others against Israeli citizens.

Yaacoub is alleged to have carried out his surveillance and recording of movements between November 2011 and January 2012, and in the first week of July 2012.

The European Union, of which Cyprus is a member, has not formally designated Hezbollah as a terrorist organization and has resisted pressure from the U.S. and Israel to do so, arguing that such a move could destabilize the fragile government in Lebanon and contribute to instability in the Middle East.

The support of Hezbollah, a powerful political and guerrilla Shiite Muslim movement that is armed and funded by Iran, is vital to the authority of Lebanese Prime Minister Najib Mikati.

Meanwhile, the Persian Gulf kingdom of Bahrain has accused Iran's Revolutionary Guard of setting up a militant cell to assassinate public figures in Bahrain and attack its airport and government buildings.

Bahraini authorities said on Sunday they had arrested eight Bahrainis in the group, with links to Iran, Iraq and Lebanon.

The kingdom, base for the U.S. Navy's Fifth Fleet, has been in political turmoil since protests erupted there in 2011, led by majority Shiite Muslims demanding an end to the Sunni monarchy's political domination, and full powers for parliament.

Bahrain has accused Shiite Iran of fueling the unrest, an accusation Tehran has consistently denied.

by Bruce WalkerThe buzz surrounding Dr. Ben Carson is loud and growing...but is it merited?

The
Republican Party has been looking for its "Great Black Hope" since J.C.
Watts almost twenty years ago. There are solid logical reasons why
black America ought to reject the slavery of leftism: violent crime,
social decay, broken educational systems, and limp economic growth all
hurt blacks more than they hurt other Americans.

The
black conservative movement has produced some significant spokesmen:
Dr. Thomas Sowell may be the greatest social historian alive; Lynn Swan
is among the greatest pass receivers in football history; Condi Rice is a
brilliant academician with grace notes of musical brilliance; Herman
Cain is a successful businessman who could speak clearly about the
economic problems of America.

Black
leftists, by contrast, tend to be like Obama: they owe everything to
leftism and shrivel into insignificance without the artificial
environment of the left's hothouse. These black Americans believe that
the successful cannot have achieved anything through merit, because
these propped up nabobs have achieved nothing themselves.

Inordinately,
these black leftists, like all leftists, tend to be drawn from academia
(where real merit is brutally punished, but groupthink is richly
rewarded), from the legal system (where the more surreal the rhetoric,
the more serious the attention) or from the hoary hosts of political
insiders (which allow even the vainest mediocrities, like Al Gore, to be
feted and flattered).

Benjamin
Carson is almost the utter antithesis of these sorts. He has succeeded
in a field in which only true intelligence, rigorous discipline, and
the toughest work ethic matter. Perhaps no black conservative in
America has his unique combination of talents and experience. When
credibility with conservatives in America is vital to our success in
future elections, Carson resembles another conservative who is rightly
regarded as completely trustworthy: Senator Tom Coburn.

These
physicians have no reason to sate their egos with political cosmetics;
they have held human life in their hands and healed it. Carson, like
Coburn, is a healer who holds deep religious convictions without
appearing or sounding preachy or phony. Many conservatives would have
loved to see Tom Coburn run for president. He won't -- Coburn is not
really politically ambitious at all -- but Benjamin Carson offers all of
the reassurance to conservatives that Coburn would offer.

Carson, like Coburn, is almost impossible to demonize. Recall that candidate Obama in early 2008 said:

The
fact is, is that I'm also friendly with Tom Coburn, one of the most
conservative Republicans in the United States Senate, who during his
campaign once said that it might be appropriate to apply the death
penalty to those who carried out abortions.

Gallup
Polls show doctors among the most respected of all professions (70%
approval), with only two more respected professions: nurses and
pharmacists. For reference, lawyers come in at 19% approval and labor
leaders at 18% -- the same class as business leaders (18% approval) and
stockbrokers (12% approval).

Forbes
actually showed doctors as more admired than nurses, with only
firefighters more well-thought of by Americans. Angus Reid, conducting
the same sort of study in Britain, found almost identical results.
People trust doctors and others in the healing arts a great deal, and
people view lawyers, labor and business leaders, politicians, and
lobbyists as phonies seeking their own gain.

If
Doctor Carson heard God's call to run for president -- and it would
have to be that, I am certain, to move him -- then he will be an healer
who has always been a healer, a man of faith whose life is a modern-day
Horatio Alger story, running against the next boring, self-obsessed
political insider in the Democrat Party to snatch the party's nomination
from sibling sharks.

Very
likely it would be a black Republican running against a white Democrat.
It would be a true expert in health care detailing the failures of
ObamaCare to a pompous policy wonk who doesn't live in the real world.
It would be a patriot in love with America running against the latest
leftist to snicker at the rubes of "Flyover Country."

Is
Carson too old to serve two terms? He would be four years younger than
Reagan when the Gipper won in 1980. Is there a downside to Benjamin
Carson? It is the same downside that every strong conservative in
America politics owns: the left will hate him. Carson, though, has
learned to overcome bile and bigotry and rise above it all.

No,
it appears, at least for now, that there is no downside at all to a
candidate Carson or a President Carson. Everything in his life,
including this last duty of honor to his country and his faith, has been
real. He is, too.

The Iranian banking system is
rife with corruption and embezzlement. Of loans to public entities, over
90% are non-performing. The Ayatollahs seem to understand that the real
threat to their hold on power comes from Iranians on the street and in
the bazaar – people who understand that the government, not sanctions,
has ruined the country's economy.

"Wealth comes like a turtle and goes away like a gazelle." -- Persian Proverb

The Iranian economy has been imploding, at times even nudging news of
Iran's nuclear program off of the front pages. In the first ten months
of 2012, the Iranian currency, the rial, lost more than 80% of its
exchange value. In a single day on October 1, 2012, it dropped by 15%,
and, after a brief reprieve, resumed its trend downwards in early 2013.
At least one commentator has compared Iran's economic meltdown with that
in Zimbabwe.[1]

Although many, including in the media, have interpreted Iran's
economic woes as proof that economic sanctions are at last "working,"
there are reasons to believe that the economic disaster inside Iran has
little, if anything, to do with the sanctions, and -- more generally --
that sanctions cannot possibly "work" against Iran. The collapse of the
Iranian currency is largely the byproduct of internal Iranian economic
policy.

During the 1990s, long before the current bout of sanctions, the
government found itself unable to service its debt, and there were debt
"reschedulings," actually partial defaults. In 1993 a particularly
severe balance of payments crisis was accompanied by rapid depreciation
of the currency and large increases in money printing.[2]

Under the Shah, the rial had been pegged to the dollar at a rate of
68.73 rials to the dollar. The current account of Iran's balance of
payments was generally in surplus, with Iran earning more foreign
exchange, including from US aid, than it spent. By 1978, with the
Ayatollahs in control, the rate was 71.46.

Over the next twenty-one years, the rial lost 99.2% of its exchange
value against the dollar, reaching 9430 rials to the dollar in July
1999. This massive loss had nothing at all to do with "sanctions,"
although a few half-hearted sanctions were imposed by the US in 1995 in
response to Iranian terrorism. Once the 1978-9 hostage crisis was
resolved, there were no sanctions to speak of against Iran. Even the
long war between Iran and Iraq, during which Iran ran up $30 billion in
foreign debts, produced none of the losses in the exchange value of the
rial. The rial actually rose slightly in value during the eight years of the war, ending at about 68.6 to the dollar. The collapse of the rial came after the war.[3]

What produced the massive depreciations was galloping Iranian
inflation, produced by hyperactive printing of money by the Iranian
government.[4] According to the IMF, "The role of money (in Iran) is prevalent in determining the price level in the long run."[5]
The consumer price index, the usual measure of inflation, tripled
between 2004 and 2011, and that is according to the distorted official
statistics, which are clearly gross under-estimates.The immediate trigger to the acceleration in the rate of depreciation
of the rial appears to be the change in the governmental subsidization
program. Like other Middle East countries, Iran has attempted to buy
domestic tranquility by subsidizing the prices of "basic" foods.[6]
Eventually the drain on the public purse becomes too severe and the
government is forced to reduce subsidies and raise food prices. This
invariably leads to political unrest. (The French Revolution was largely
triggered by similar subsidization-then-cancellation financing schemes
by Louis XVI.) The "Arab Spring" riots began in Tunisia when food
subsidies were slashed; the unrest spread from there to much of the rest
of the Arab world.

On December 18, 2012, the Iranian government eliminated food and energy subsidies (including to electricity consumption).[7]
Petrol prices before the reform were only about 40 US cents to the
gallon. The government attempted to buy the cooperation of the public by
granting almost all consumers in Iran a cash grant in lieu of the
higher prices for food and utilities. 50% of the loss in purchasing
power was supposed to be restored to consumers by the government in what
it was calling "targeted subsidies." Close to 80% of Iran's population
was granted unrestricted access to compensatory payments that had been
deposited in specially created bank accounts. 7000 Iranian corporations
also received the "targeted subsidy." According to Prof. Meir Litvak,
director of the Center for Iranian Studies at Tel Aviv University,
"Until two years ago, the Iranians spent $90 billion a year on subsidies
for food and fuel. Today, they spend a similar sum on monthly
compensation payments to low-income families. This compensation cancels
out the savings achieved by the abolition of the subsidies."[8]

Macroeconomics professors routinely conduct thought experiments with
their students about what would happen if a giant helicopter were simply
to dump money cash down upon all the consumers in a society, but it is
doubtful any other country before Iran has tried to apply the idea
literally. There is some evidence that the "experiment" has resulted in
widening gaps in wealth and income across Iranian social classes. [[9]Possibly
the wealthier and better-connected classes in Iran may be getting more
than their fair share of the "compensatory payouts," and therefore are
not as harmed by the cuts in subisides .Iranians also seem to have long had a fetish for gold, and in times
of distress run to it. In September 2012, gold prices inside Iran jumped
7% in a single month.[10] According to a report on Bloomberg,[11]
the central bank of Iran tried to stabilize the price of gold by
auctioning gold reserves. Ali Alfoneh, an economist at the American
Enterprise Institute, wrote: "After two weeks, they abandoned the
strategy because they could no longer defend the currency. The price of
gold was still going up, because there's no public confidence in the
CBI."

Soon after that, the regime decided to seek more effective means to
stop the run on the rial. "As the exchange rate for dollars skyrocketed
from 29,000 Iranian rials to nearly 35,000, police used tear gas and
batons to disperse money changers and traders outside the Central Bank
demonstrating against president Mahmoud Ahmadinejad's mishandling of the
economy."[12]

Iranians have been pouncing upon gold from any source they can find, particularly gold imported from Turkey.[13]
World gold exports in the first seven months of 2012 were five times
more than the total in 2011 -- owing to rising demand from Iran, which
had accounted for only 4% of sales two years earlier. According to the
Guardian, "In the wake of the currency crisis, many Iranians who have
lost faith in the rial are now contributing to its instability by
rushing to convert their assets and properties to foreign currency and
gold. The government has repeatedly attempted to bring the currency
under control, but with no success. Last week it launched an exchange
centre aimed at stabilising the rates, but the rial's fall has sinceincreased."[14] The Iran government had made large gold purchases in 2011,[15]
but these were being rapidly lost in 2012 in the speculative attack by
Iranians themselves against their own national currency. Alcoholism,
which is not supposed to exist at all in Iran, perhaps as a result of
the economic troubles, seems to be on the rise.[16]

Further, to the extent that international tensions have affected
Iran's markets at all, it appears that what matters []is the growing
talk of armed conflict, not "sanctions." Many Iranians may believe that
any armed conflict would have a far more serious impact upon their
standard of living than sanctions have had until now, where trade and
supplies of commodities and even utilities could be disrupted. Sanctions
can be bypassed by clever merchants. Cruise missiles, however, and
their effect on the functioning of the economy, cannot.

Skepticism about Sanctions

Economic sanctions are not the cause of the collapse of the Iranian rial. Economic sanctions never "work."[17]
Rhodesia held out many years even with near universal sanctions against
it. Sanctions can have some symbolic value and demoralize the targeted
populations. But even nations seemingly subjected to the harshest
sanctions -- Rhodesia, South Africa, North Korea, Cuba -- managed to
function and trade in world markets quite well in spite of them. In Cuba
and North Korea, their domestic poverty and misery are produced by
rigid central planning more than by any sanctions.

Economic sanctions are more symbolic manifestations of anger or moral
indignation than effective weapons of state. While economic sanctions
have been used by various states for centuries, they have rarely, if
ever, achieved much.[18]
They failed to change the behavior of Serbia, they failed to force Iraq
out of Kuwait and they failed to mend human rights abuses in China. Any
limited effectiveness economic sanctions have is usually when they accompany actual armed warfare, not when they substitute for warfare – for example, as in the sanctions that accompanied the two world wars and the Napoleonic campaigns.Further, the timing of Iranian regime's economic woes pre-date
economic sanctions. The sudden acceleration in the demise of the rial
took place after years of sanctions, only when threats of armed
intervention were being voiced and "red lines" were being drawn by
Israel and the United States, lines that began to concentrate the mind
of the average Iranian. Sanctions simply do not cause a serious enough
loss in standards of living for countries targeted by them, and there
are also too many ways to evade the sanctions. Sanctions have not
stopped the trade in African "blood diamonds;" and they are even less
effective against moderately developed middle-income countries.

Some of the "sanctions" against Iran were clearly pointless and
ineffective. For example, the US and Western allies announced in January
2012 that Iran was being cut off from international payments and bank
settlements systems, which are used to clear electronic payments and
checks. More recently there have been calls to evict Iran from the
payments clearing system for Euros ("Targeting Tehran's Euros," Wall
Street Journal, February 18, 2013.) All Iran needed to do, however, to
continue to participate in the world payments system was to find a
single "correspondent" or representative bank willing to clear payments
for the country, to accept payments coming in and use the proceeds to
pay Iranian bills. To do this, it was not even necessary to choose from
among the many banks from Islamic countries. There have been reports
that the giant British bank HSBC has been providing Iran with
correspondence services,[19] and Russia also appears to have been providing clearing services.[20]
In other cases, the sanctions almost appear to be designed to solicit
chuckles, such as those imposed by the UN in 2010 directed only against
eight individual Iranian officials.[21]

The most important reason for skepticism about the role of
"sanctions" in the collapse of the rial, however, is the evidence that
internal economic policy and regime incompetence in printing money and
thereby devaluing was what produced the mess.

A superficial examination of Iran's economy would seem to point to
its enormous potential, invulnerability, and capacity to withstand
sanctions.[22]
It is the world's fourth largest petroleum producer and was until the
recent turndown the second largest oil exporter in OPEC. Iran has
estimated proven oil reserves of 137 billion barrels (as of January 1,
2011). Its standard of living was until recently higher than most other
Middle Eastern countries, if not quite European levels. Until the
current crisis hit, its per capita GDP, a common measure of productivity
and wealth, was just behind the levels for Turkey and Brazil. By most
standards of health, education, and wellbeing, Iran appeared to be well
on its way into the international middle classes. Life expectancy in the
country was close to European levels.

The Iranian economy nevertheless still manages to defy all indicators
of health, steadfastness and cohesion. The culprits are not hostile
Westerners, but rather incompetent Ayatollahs who have been handed a
country to run. The latest form of environmental policy in Iran consists
of calling on snipers to kill the giant rats that have taken over
Tehran.[23]

The Plummet of the Rial

Current popular joke in Iran: How many rials are in a dollar? Now, or… now?[24]The demise of the rial has been one of the most dramatic financial
events in recent history. The currency, named after the old Spanish Real
(similar to royal) coin, traded at a distorted and artificial
"official" rate of 1750 rials back in 2002. It is difficult to pin down
the exchange value of the currency for various dates, and there are in
fact multiple exchange rates maintained by the Iranian regime, each for a
different class of transactions.[25]
For example, foreign currency for imports is purchased at different
exchange rates depending on how "essential" the regime regards the items
imported. Recently the regime raised the price for buying foreign
exchange used to pay for imported Basmati rice from India, evidently
because rice was suddenly regarded as less essential.[26]

Other countries have experimented with such multiple-exchange-rate
systems; these not only always fail, but create economic havoc because
imports and exports end up being determined and selected by the
arbitrary pseudo-pricing, not by market considerations of profit and
cost effectiveness. The different rates are assigned arbitrarily to
different classes of transactions; smart traders find ways to redefine
their transactions to get the better rates. Iran has repeatedly
announced over the years the unification of its exchange rates, only to
back-peddle and re-introduce the multiple rates all over again. The
results were not long in coming.

The assignment of different sorts of transactions to different
exchange rates in any multiple-exchange-rate system is arbitrary; clever
traders always find ways to move transactions supposedly assigned to
one rate to a better, more favorable rate, then pocketing the difference
as "arbitrage" profits.[27]
Indeed, growing internal anger in Iran has focused on charges that
insiders and cronies of the regime are making fast and easy riches by
exploiting the inconsistencies in the system of multiple rates. The US
has also condemned Iran for allowing such arbitrage profiteering by
insiders.[28] The Iranian exchange rate has long been characterized by high volatility and "over-shooting" of equilibrium levels.[29]The "official" exchange rate for the rial is an arbitrary and
misleading non-market rate invented by the regime. Maddeningly, it is
the only one cited by the CIA in its "World Factbook," and this is
hardly the only economic "fact" the CIA gets completely wrong.[30]
The CIA, for example has a record of accepting at face value the
"estimates" of Gross Domestic Product and standards of living of many
countries, including those without market economies, where prices have
no meaning. Before the collapse of communism, for decades the CIA
accepted many Soviet "estimates" and statistics at face value. The
Iranian government also manipulates []the currency all the time by
buying and selling foreign currency (and not just the currency market,
but also the gold market). Along with all the confusion, by early
October 2012 the rial had depreciated in the open market to about 35,500
per US dollar -- about 300% of the "official" exchange rate proclaimed
by the government. By January 2013 the rial was trading even lower even
than that. The Governor of the Iranian Central Bank was fired and an
official "probe" of the Central Bank's malfeasance was announced.[31]

The plunge in the value of the rial was accompanied by a massive loss
in Iranian state foreign reserves. According to the International
Monetary Fund, at the end of 2011, Iran held 106 billion dollars in
official foreign reserves, mainly deposits in Euros and other European
currencies,[32]
enough to cover 13 months of imports of goods and services into Iran.
But these declined rapidly, so that by November 2012 Iran announced it
plans to stop holding dollars and Euros as reserves.[33]

Iran has already cut the portion of its reserves held in US dollars,
no doubt out of fear that America will again freeze its funds. It has
reason to worry. In 1979 the US froze $12 billion in Iranian assets in
response to the hostage crisis. Later, in 2009, the American government
froze another two billion dollars in Iranian funds held in the US.[34]
While Iran keeps its level of reserves secret, Nader Habibi, an
economist at the Crown Center for Middle East Studies at Brandeis
University, estimates that by September 2012, these had plummeted to
50-70 billion dollars from an estimated 100 billion dollars at the end
of 2011. [35]

Galloping Inflation and Currency Depreciation

Hyperinflation and rapid depreciation always go together . Supply of
foreign currency drops and demand for it increases when there is high
domestic inflation. . Hyperinflation is where a currency quickly loses
its purchasing power in the domestic market; rapid depreciation is where
the same currency loses its purchasing power in foreign markets. The
Iranian central bank is not independent; it is tightly controlled by the
regime.[36]
Iranian central bank official statistics concede that the amount of
money in circulation more than quadrupled between 2001 and 2011.

No one really knows what the Iranian inflation rate is because the
officially announced rate is fictional. The government claims it is
"only" around 22% but one could probably not find a single Iranian
consumer who believes that. The Wall Street Journal cites sources who
put it above 50%.[37]
There is evidence that inflation in food prices is considerably higher
than the overall inflation rate. To make matters worse, the Iranian
Central Bank has traditionally been the source for (very incomplete)
financial and economic data for the country, but responsibility for data
has now been passed over to an official governmental Statistics Office.
Many of the pages, however, that are supposed to contain statistical
data for the country are blank or missing on all web sites. From what we
can ascertain, it appears that Iranian real national income went into a
downward spiral in 2007.

Fereydoun Khavand, a professor of economy at the Paris Descartes
University and an Iran expert, claims that the economic downturn is now
serious enough that it is threatening to destabilize the regime. "There
is growth stagnation plus inflation, a dangerous combination that might
make Iran compromise."[38]
It has not done so, at least not yet. Throughout history, stagnation
and inflation have only produced belligerence, aggression and war -- and
brought Hitler to power.

The rapid depreciation has been accompanied by a flight by Iranians
to gold, to the dollar and to other foreign currencies. According to one
financial report, "(T)he Central Bank of Iran (CBI) over the past few
months has restricted cash withdrawals and allows those travelling
outside the country to take with them only $2,000 a year.

The most radical step came on 26th January 2012 when the CBI's
Governor, Mahmoud Bahmani, announced that it would be changing the
official rateof the Rial against the Dollar at 12,260 Rials from 28th January and
seek to meet all demand for foreign currency through banks. The CBI's
plans to devalue the Rial at official rates are aimed at reducing the
unofficial market's influence in undermining the currency.

Financial Instability and Mismanagement

The Ayatollah Khamenei recently urged Iranians to consume Iranian
products and shun foreign goods in order to support domestic production.[39]
Why such policies produce poverty is the subject of the first week's
classes in any Freshman Econ course: international trade allows
countries to produce more efficiently, and to obtain products in the
world market for a fraction of what the products would cost to produce
domestically.The financial system of Iran is one in which financial transactions are supposed to be subordinated to Islamic law.[40]
Therefore interest payments are formally prohibited. The entire banking
system is based on loopholes and escape clauses that allow banks to
charge and pay interest, but without calling these payments of interest.[41] The ersatz
interest payments are generally well below inflation rates, implying
that credit is ultimately directed administratively: bureaucrats
determine which borrowers get credit and at which rates, based on whim
and caprice, rather than markets assigning credit to the highest bidders
in a market mechanism. In addition, Iranian households tend to seek
alternative venues, foreign currencies and gold, in which to hold their
savings, to avoid the losses due to the negative returns on bank
deposits. Some bank savings have flowed out into the Iranian stock
exchange. While shares there rose by 500% in the decade ending in 2011
in rial terms, this was virtually entirely a reflection of rial
inflation.

Much of the credit allotted by the Iranian banks goes directly to the
government; between 2000 and 2010, lending to the private sector, as a
proportion of GDP, was flat. The government instructs the banks how to
allot credit, which borrowers and which sectors must be regarded as
"priorities," and to which clients the banks must direct most of their
lending.[42] According to the IMF:

In 2010-11, the MCC recommended that banks allocate 80 percent of
their increase in deposits to priority sectors—37 percent to
manufacturing and mining, 25 percent to agriculture, 20 percent to
construction and housing, 10 percent to trade, and 8 percent to export.
The remaining 20 percent of the increase in deposits could be used
freely, although there are sub-limits on credit for consumer durables or
home improvement.

Banks cannot extend facilities for the purchase of property since
2009, only facilities for home improvement with a ceiling of 50 million
rials (approx. $45,000). The public housing bank is not subject to these
limitations.

The Iranian banking system is rife with corruption and embezzlement.[43]
The corruption seems to run all the way up the ladder; a former head of
the Central Bank was recently detained in Germany with a suspicious $70
million check in his possession.[44]
Iranian banks have low levels of capitalization, and even that capital
-- because they tend to set aside very small amounts against delinquent
and non-performing loans -- is imaginary, erased by non-performing loans
that are still treated as if they are performing. State-owned banks are
in worse shape than private-sector banks; in 2010 alone, due to bad
loans, most of their capital vanished.

Officially, over a quarter of bank loans are non-performing, but
there are some indicators showing much higher rates of default. Bounced
checks have also become something of a national plague.[45] Of loans to public entities -- state owned utilities, enterprises and municipalities -- . , over 90% are non-performing.[46]
While initially Iranian banks were state-owned, in 1979 private banks
were permitted to operate. In recent years privatized banks have
expanded their operations, although they are still closely controlled
and micro-managed by the regime.

Incompetence is the Cake; Sanctions just the Icing

While they are not the main cause of Iran's economic implosion,
sanctions against Iran have an effect at the margin, to use the favorite
expression of economists to refer to critical small incremental
changes. Iranian oil exports are thought to have dropped by half in the
first part of 2012, and seem to have continued to decline into early
2013.[47] Since oil prices decreased during the same period, revenue receipts for exported oil also dropped to an even greater degree.[48]
Much of the drop in oil revenues was caused by sanctions, although
expansion in exports by other OPEC petroleum producers and the
continuing world recession also contributed to the drop in Iranian
export revenues. There are plenty of countries that are ignoring the
international sanctions and expanding their purchases of oil from Iran.
Some of these trades, especially for petroleum, are being conducted
openly; others, discreetly, under the table. Some of the loss in Iran's
export earnings was due to oil reserve revenue that simply mysteriously
"disappeared."[49]

The sanctions surely did not help the Iranian economy. But economic
misery, because it is domestically produced, would be almost as bad even
without them. "The free fall of the rial is due to a combination of
President Ahmadinejad's economic mismanagement and the international
sanctions regime," says Ali Alfoneh. "However, the Iranian public is
first and foremost blaming the regime for economic hardships."[50] The Iranian daily Jomhouriye Eslami's
cited the speaker of the Iranian parliament, Ali Larijani, as saying
that 80% of the country's economic problems were due to economic
mismanagement. Iran's economic troubles are thought to have forced the
country to pull troops out of Syria that were defending the Assad
regime.[51]

Talking heads in the Western media have been emerging in droves and
patting themselves on their backs for the "success of the sanctions" in
producing the collapse of the rial. The US Congress proposes
capitalizing on the "success" of the sanctions by imposing more of them.[52] The Iranian government characteristically blames Western "conspiracies" for the collapse[53]
-- that is, when it is not blaming domestic conspiracies. Dr Ghulam Ali
Haddad Adel, former speaker of Iran's parliament, said that Iran would
defeat the enemy's "conspiracy against its foreign currency and gold
markets."

Iranian government actions seem to belie the claim that Iran really
thinks the sanctions are what lie behind its economic sickness. Recently
the government claimed 22 key Iranian "speculator ringleaders,"[54] sixteen of whom were arrested, were behind the run on the rial.[55] President Ahmadinejad threatened massive additional arrests.[56] Iranian police were assigned to stop the speculation by beating speculators and currency traders in the bazaar.[57]
Complain as they might about the conspiracy of the Zionist-Crusaders to
undermine their economy, the Ayatollahs seem to understand that the
real threat to their hold on power comes from Iranians on the street and
in the bazaar -- people who understand that the government, not
sanctions, has ruined the country's economy.

###

Steven Plaut teaches finance and economics at the Graduate School of Management at the University of Haifa, Israel

[1] "Iran Loses the Economic Battle," By John Allen Gay , National Interest, October 4, 2012